Digital transformation is on every business leader’s mind. But what does it mean?

To understand this fundamental shift more deeply, IBM partnered with French think tank group ebg to interview more than 80 digital leaders and C-suite executives from the CAC 40 (the top 40 private companies in France) as well as other key players in the French economy.

These interviews confirm that digital is an irreversible trend affecting all businesses. However, the way this transformation is being tackled is far from homogeneous. Even within individual organizations, there are vast differences in how digital is viewed, ranging from a significant opportunity to a disruptive threat. Likewise, digital transformation isn’t always seen as a shared responsibility that business leaders need to plan for strategically. All too often, digital is seen as a function of the IT department, meaning lack of integration with business expectations. Successful organizations demonstrate that digital transformation cannot exist as a standalone “special project.” Instead, it’s essential that digital transformation is embedded in the entire company strategy and fully incorporated across the entire organization with all functions and departments involved, whether customer-facing or back-office.

Companies active on this digital journey can realize additional enhancements to their business portfolios by creating services around their existing offerings, especially on the mobility side, or through extensive usage of APIs. Many companies see themselves transitioning from producing goods toward producing value-added services. Nowadays, these services are also a source of data for even more uses and services, commercial or otherwise. Therefore, digital transformation is playing a large role in moving us from an economy of physical products to more of a services-based economy.

The business leaders we spoke with also acknowledge that one of the obstacles to this new digital economy, which is based on agility and innovation, lies in the tendency for internal business departments and functions to operate in relative isolation, with a silo mentality. This is especially prevalent in large organizations. Chief Digital Officers (CDOs) and business leaders need to champion the concept of “digital continuity,” where the data that spins the wheels of different departments – from marketing to operations, to supply chain and finance – also flows across those departmental boundaries. Collaboration among departments must become the rule. This shift is not only a matter of implementing collaborative tools, but also requires new ways of thinking and working, which recognize the value of collective intelligence.

Collective intelligence doesn’t have to be limited to the internal organization either. Entire industry ecosystems are being transformed through the application of digital techniques to break down barriers and promote greater sharing and value creation up and down supply chains through closer collaboration with external partners, clients, suppliers and distributors. With this broader approach, new partners and start-ups can navigate more easily in the ecosystem and fuel further innovation.

Some of the organizations we surveyed also saw the opportunities that digital transformation could bring by easily identifying potential acquisition targets to enrich their offerings and business models. On the other hand, others took a less-predatory view and saw digital transformation as helping to fuel incubation models, which in turn help businesses cultivate the vitality and innovative approaches of new entrepreneurs.

Digital transformation is impacting our everyday life, as a business user and an end-user. Every business person is also a consumer – and our digital use as consumers is often charting the course for the transformation of business.